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Monday, 07 May 2012 09:30
Insurance Corp. of British Columbia v. Stainton Ventures Ltd. is a recent decision of the British Columbia Supreme Court that addresses the issue of the use of trademarks in domain names. The plaintiff in the case, the Insurance Corp. of British Columbia (ICBC) objected to the use by the defendant Stainton Ventures Ltd. of its ICBC mark in its domain names, on its website, and on a booklet which it produced for sale. The defendant, through its website and booklet, offered advice on how to deal with B.C.’s motor vehicle insurer.
The defendant’s website was initially established in 2006 with the URLs <fightICBC.ca> and <fightICBC.com>. The site provided information about dealing with ICBC, and also listed the names and contact information of health care professionals. At the time, ICBC contacted the listed health care professionals and drew their attention to the listings. The defendant received feedback from a number of these professionals, who apparently objected to the rather adversarial domain name of the website. It subsequently changed its business cards, website references and other materials to ICBCadvice, and registered the new domain names of <icbcadvice.ca> and <icbcadvice.com>. In 2008, it began offering for sale from its website a publication titled ICBC Claim Guide.
In 2009 the defendant received its first cease and desist letter regarding the use of the ICBC acronym. Justice Grauer of the B.C. Supreme Court noted that although it was only in 2008 that there was an actual commercial offering from the site, it was clear from the outset that the site had served a marketing function for the defendant’s law practice. After receipt of the cease and desist letter, the title of the claim guide was changed to ICBCadvice Claim Guide. No other concessions were made by the defendant.
The plaintiff applied by way of summary trial for declarations that the defendant was infringing its rights in its official mark ICBC, that it was passing off its wares and services as those of ICBC, and that it was in violation of s. 52 of the Competition Act for having made false or misleading representations. The court ruled against ICBC on all counts.
The first issue was whether the defendant had infringed the plaintiff’s rights in ICBC’s official mark “ICBC”. Section 11 of the Trade-marks Act provides that “No person shall use in connection with a business, as a trade-mark or otherwise, any mark adopted contrary to section 9 or 10 of this Act....” Section 9(i)(n)(iii) prohibits the adoption of a mark “in connection with a business, as a trade-mark or otherwise, any mark consisting of, or so nearly resembling as to be likely to be mistaken for” an official mark. Justice Grauer rejected the plaintiff’s argument that the defendant’s mark was identical to its ICBC mark because it reproduced the ICBC mark. Instead, he chose to consider whether “ICBCadvice” so nearly resembles “ICBC” as to likely be mistaken for it. Justice Grauer was persuaded by the defendant’s argument that there was no evidence of confusion on the part of visitors to the website. He noted: “The evidence just does not support the contention that through its domain names, the defendant either intended or accomplished the redirection to its site of traffic looking for ICBC’s own website...” (at para 25). Further, he found that drivers in B.C., who were very familiar with the ICBC mark, would not likely be confused into thinking that the ICBCadvice domain names were linked to the official mark. He concluded that “they would take it as identifying the subject-matter of the site, not whose site it is” (at para 26). However Justice Grauer does not consider whether consumers would be likely to think that the subject matter of the site (advice about ICBC) emanated from the insurance company itself, as opposed to some other party. In fact, the official ICBC site also provides advice to customers on how to proceed with making a claim.
Justice Grauer noted that he also would not have found the “fighticbc” domain names to be infringing. There would seem to be at least an argument that “fighticbc” is much less likely to be confusing than “icbcadvice”, since ICBC is less likely to advocate fighting itself than it might be to provide advice to motorists on how to proceed with a claim. The discussion in this respect is unsatisfying. While most domain name cases seem to reject domain names for critical websites that merely use the unmodified trademark of the target company, there is still a lack of clarity as to what kind of modifying language will suffice to make it clear that the site to which the domain name resolves is not that of the target company. In addition, the case law around domain names and critical sites usually involves non-commercial criticism or protest sites; the impact of the commercial dimensions of the defendant’s site in this case is not fully discussed. While I do not necessarily disagree with the outcome of this case, it would have been helpful to have a closer consideration of these key issues.
Justice Grauer did find that the original version of the defendant’s commercial claim guide violated s. 11 of the Trade-marks Act. Its cover featured ICBC in large type with “Claim Guide” below in a much smaller font. However, the revised cover, which reads “ICBCadvice Claim Guide” passed muster. He made an order restraining the distribution of the original guide, but not the revised version.
Justice Grauer dismissed the passing off arguments relating to the website and the domain names. Although it was clear that ICBC had goodwill in its mark, he found that the “ordinary average automobile insurance customer” would not be confused into believing there was a business connection between the defendant’s website and the complainant. Once again, his analysis seems to focus almost exclusively on the issue of actual confusion. He wrote: “I cannot see how an average customer would be deceived into thinking that the website is somehow associated with or approved by ICBC. There is no evidence of either actual confusion or likelihood of confusion, and as noted, a likelihood of confusion is not so obvious that evidence is unnecessary” (at para 44). He rejected the plaintiff’s argument that search engines would turn up the defendant’s site in any search using the term “ICBC”. He wrote: “The behaviour of search engines is not, in my view, evidence of anything other than the operation of an algorithm, and search-engine marketing. It is certainly not evidence of confusion” (at para 46). He went on to ask: “Is the public so naive as to assume that every hit returned to a search for “ICBC” is somehow associated with or endorsed by the Insurance Company of British Columbia? I suspect that the Industrial and Commercial Bank of China would be rather distressed if that proved to be so” (at para 46). In his view, “the average customer of normal intelligence would not be led astray, and would have no difficulty recognizing that ICBCadvice.com would probably relate to how to deal with ICBC in an arm’s length or even adversarial sense, rather than in a manner endorsed by ICBC” (at para 48). Justice Grauer also quickly dismissed the claims of false and misleading representations under the Competition Act.
Published in Blog
Wednesday, 18 April 2012 09:25
The Quebec Court of Appeal has overturned the decision of Justice Zerbisias of the Quebec Superior Court to award $125,000 in extra-judicial costs and punitive damages against a company that lost a trademark infringement suit.
Les Industries Lassonde is the owner of the registered trademarks OASIS and associated marks that feature the word OASIS, for juices, drinks and sherbets. In 2009 they brought a trademark infringement suit against L’Oasis d’Olivia Inc., arguing that the defendant’s mark OLIVIA’S OASIS for body care products was confusing with their OASIS marks. After a five-day hearing, Justice Zerbisias found that there was no likelihood of confusion, nor was there any depreciation of the goodwill associated with the plaintiffs’ mark. She concluded that “to impute the likelihood of confusion between Plaintiff’s and Defendant’s mark to the average consumer would insult him or her by assuming that such consumer is completely devoid of intelligence; of normal powers of observation, recollection and recognition; or, is so totally unaware or uninformed as to the environment in which they are found, that they would be easily deceived about the origin or nature of the wares they purchase.” (at para. 52)
At the end of the trial, counsel for the defendant made an oral motion seeking extra judicial costs and punitive damages against the plaintiffs. They relied upon provisions in the Quebec Code of Civil Procedure that came into effect on June 4, 2009. The Bill which added these provisions was titled “An Act to amend the Code of Civil Procedure to prevent improper use of the courts and promote freedom of expression and citizen participation in public debate.” (S.Q. 2009, c-12) In short, these provisions are a kind of anti-SLAPP legislation. Strategic Lawsuits Against Public Participation (SLAPP) are typically baseless law suits that have as their goal the intimidation of those who are critical of or who oppose certain types of activity. The intimidation is chiefly economic; the cost of defending against a SLAPP suit can be devastating for most individuals or public interest groups.
In this case, the defendant argued that the plaintiffs had “engaged in manifestly unfounded, frivolous, vexations proceedings, excessive and unreasonable in the circumstances, in an attempt to bully it and to prevent it from the lawful exercise of its rights to use its trade-mark and to engage in business under the name of Olivia’s Oasis” (at para 56). Justice Zerbisias agreed. In a very blunt assessment of the conduct of the plaintiffs she found that they had “unnecessarily pursued a claim they knew or should have known would not succeed” (at para 63). She based this conclusion on the sharp differences between the parties’ wares and target clientele, and on the fact that there had been no evidence of any confusion over the 5-year period of concurrent use of the parties’ trademarks. She found as well that the plaintiffs knew that the word OASIS was not a strong mark, and that there were many other registered trademarks incorporating that word, as well as many other businesses in Canada that used the word as part of their business name. Justice Zerbisias noted the disparity in power and resources between the parties, and referred to the plaintiffs’ conduct as “menacing and abusive”.
The plaintiffs did not appeal the judge’s finding of lack of confusion; instead, they confined their appeal to arguing that the award of extra-judicial costs and punitive damages was not justified on the facts, and that even if it was, the calculation of the amount of extra-judicial costs was not based on any evidence and was therefore flawed. In its decision on March 30, 2012, the Court of Appeal agreed on both points. The most significant finding, of course, is that the conduct of the plaintiffs did not amount to the kind of abuse contemplated by articles 54.1 and 54.4 of the Code of Civil Procedure. The Court began by noting that there was nothing in the actual conduct of proceedings that was abusive. The defendant’s argument depended instead on a finding that the proceedings should not have been brought in the first place. In contrast to the trial judge, however, the Court of Appeal found nothing to suggest that the commencement of proceedings was inappropriate. They noted that there was nothing inherently excessive about seeking to enforce one’s trademark rights. Once the plaintiffs had concluded that there was a risk of confusion created by the defendant’s mark, the plaintiffs were within their rights both to oppose its registration and to sue for trademark infringement. The Court noted that this was not simply the normal practice in such situations; it was almost an obligation in order to protect one’s trademark rights.
The Court of Appeal was also unprepared to find that the action commenced by the plaintiffs was doomed to fail from the outset. They noted that the trial judge spent 50 paragraphs of her decision discussing the issue of confusion following a five-day trial and a long period of deliberation. They observed as well that good faith must be presumed, and bad faith must be proven. They found no evidence to support the conclusion that the plaintiffs were motivated by bad faith. While the trial judge had found that other suits brought by the plaintiffs against other holders of marks for vastly different wares or services that incorporated the word “oasis” was evidence of a pattern of conduct, the Court of Appeal refused to draw an inference that this was evidence of harassment of any and all who might use the word “oasis” in relation to a business. They noted that a different inference could well be made: that the plaintiffs sought to protect the distinctiveness of their trademark. The Court indicated that much more evidence would need to be provided to support a finding of bad faith.
The case raises interesting issues about what might constitute sufficient proof of bad faith to give the anti-SLAPP provisions any application in the trademark context. It is certainly the practice for trademark owners to vigorously defend the distinctiveness of their marks; loss of distinctiveness is fatal for a trademark. The kind of disparity in economic power in this case is not unusual in a context where a new entrant in the market place has adopted a trademark that an established company might see as encroaching upon their existing trademark rights. The assessment of confusion requires a fact-driven, contextual analysis; it is not something that is always apparent on the face of things.
Perhaps the anti-SLAPP provisions might have a greater role to play when there is better evidence either that the rights being asserted are dubious, or that they are being asserted in a vexatious manner. This might occur where the proceedings themselves are conducted in an abusive manner, or where there is evidence of the bad faith assertion of trademark rights that goes beyond the normal practice of protecting one’s interests. It might also occur in circumstances where the plaintiff has no valid cause of action. For example, the non-commercial, critical use of a trademark seems to fall outside the scope of the legislation (although such a use of a design mark might infringe copyright, which raises a different set of issues). Such a case would also raise the freedom of expression issues which seem to be identified as central to the bill which brought about the amendments to the Code of Civil Procedure.
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